I I I I CAPITALISM AND COUNTERPOISE C. R. FAY ·CAPITALISM stands to Communism as the system that is to the system that is dreaded or noisily desired. But why is it that Capitalism signifies the system that is? Why is it a synonym for established interests? For answer, we must look to history. The Middle Ages closed with the discovery of the new world. Till then, society ·was feudal. Power was in the hands of the soldier and the ecclesiastic, whose control extended beyond fighting and religion, to economic life, then mainly agricultural. When the towns (in England, with the assistance of the king), had asserted their independence against their feudal over-lords, the possession of Capital. took on a new importance. It became a power capable of moving society by its impersonal force. The accumulation of Capital was facilitated by the discovery of the new world and of an ocean route to the Orient. At first, Capitalist enterprise was subject to control by the State as well as by the local groups, the gllds and corporations whose life it threatened. But in the end it escaped from these controls without precipitating a domestic revolution, because it was able to gain its strength and profits abroad. In the profits of world trade the landed nobility could share without social stain: and from its worst consequences, the horrors of the slave trace, the native workers of England were exempt. Capitalism spent its youth in the exploitation of foreign parts. This was its first age. We call it mercantilism or merchant Capitalism. The predominance of the merchant, who ventured abroad in quest of new materials and new markets, gave it a distinc­ tive flavour. In this age the trading empire of Britain was born. The English language has no word for bourgeois, just because England jumped so quickly from feudalism to world-trade. She had landlords and landlordism, merchants and mercantilism, but no cult of bourgeoisie. Foreigners regarded her as a nation of shopkeepers, but they meant merely a nation which claimed to carry and keep shop for the rest of the world. 64 THE DALHOUSIE REVIEW The second age of Capitalism was industrialism or industrial Capitalism. This age opened with the Industrial Revolution in the first half of the nineteenth century. Geographical discovery was overshadowed by technical discovery, foreign ventures by new machinery. The industrialist in command of machinery driven by power proclaimed a new kind of empire. That country which, first enjoyed it could afford to lose territory. Hence the indifference· of Great Britain to the loss of America, and the neglect with which despite that loss, she treated the colonies which remained loyal. This new empire had a profound reaction on working class life. The first age of Capitalism broke down the comparative equality of gild life, and brought the producer into dependence· on the merchant for materials and markets. And yet, though thus dependent, the worker was still a domestic worker, working in his own time; the physical control over him was indirect and unobtrusive. But with the arrival of the factory and large-scale production, the worker became a wage-earner pure and simple. The difference between class and class was more clean-cut; and though the few still rose, the barrier for the majority was impassable. Such massing of workers in factories and plants increased the opportunities for exploiting them. To the black slavery of the West African negroes, deported by physical force to the plantations,. succeeded the white slavery of women and children forced by economic pressure into the factories and mines. The third age of Capitalism is that in which we live. We may call it financial Capitalism, for its distinguishing feature is the power of high finance. The individual employer has now himself a master, the financial syndicate, which is ever at work merging established concerns and planning extensions into foreign parts. Many one-man businesses still survive. High finance con­ sents. They are allowed to grow until they are ripe for purchase. The stronger among them make good terms. The very strongest, (for example, Mr. Henry Ford), defy finance and grow into industriql giants who are sufficient financially unto themselves. The reaction of this third form of Capitalism is not important. It is merely the exchange of an individual master for a group master; and for the work of actual production, the group must delegate its power to an individual works manager. It may even strengthen the worker as a bargainer, because collective bargains are easier to exact from a nation-wide employing group. The biggest reactions are· on others: 1. On those who formerly founded or entered family businesses. These must ·now enter the comparatively new class, (as a class. CAPITALISM AND COUNTERPOISE «55 • of salaried management). On the balance, this reaction is not injurious either to the class itself or to industry. 2. On investors. This reaction is demoralizing. The orgy of speculation, which in New York to-day disputes with the "movie" the first place in popular excitement, is passive and devoid of constructive stimulus. We need not take the cynical view that the outside investors lose on the balance. For real wealth is increasing fast, and ·speculation extends to securities both good and bad. The injury is the waste of social effort involved in the scramble for a share in the leavings of high finance, unaccompanied by any positive contribution to the delivery of the product or service in which they speculate. This criticism does not apply to the organized speculative activities of product exchanges. 3. On the consumer. The consumer also is becoming more and more passive. He is drenched with standardized novelties. The real strength of the old craft life was the contact between producer and consumer (often indeed, a contact between a poor craftsman and a rich nobleman or ecclesiastical body); and the contact was frtritful of individual variety. But uniformity of consumption is one of the penalties of democracy, and the richest democracy in the world cannot live for ever on the art treasures of Europe. Moreover, the heavy hand of finance extends to letters and sport. The get-up of our newspapers, the broken paragraphs and front-page headlines, are perhaps dictated in part by_consideration for the convenience of the reader who journeys to business holding his paper in one hand and the car strap in the other; but the main purpose is to force our attention on the trade advertisements which threaten to subordinate social and political news. For the advertisements make the paper pay. Similarly with our sports. The objection to professionalism is not that some people make a living by it, but rather that the supply of sport becomes a gigantic financial affair. There is a danger that we may abandon good sport because it does not draw the crowd, or that we may be prevented from retracing our steps because of the financial outlay to which the existing sports structure has committed us. Meanwhile, for professional and amateur alike, the vital element in good sport, which is not casualness (for that is bad sport), but ardent and enjoyable team effort, is sacrificed to the autocracy of the sports man,agement with an eye on results. Thus much on the evolution of Capitalism, first mercantile, then industrial, and now financial. I described Capitalism at the outset as the system that is; but this needs qualification. Though Capitaliffil is the continuous thread in the economic evolution ot .. 66 THE DALHOUSIE REVIEW the E.nglish-speaking world, naked Capitalism nowhere exists, not even across the border. It is tempered by controls or compen­ sations; and when these involve the outlay of money, the greater part of it has come from the profits of Capitalism,-some part by taxation and another part by gift, for example, the research founda­ tions set up from the fortunes of Rockefeller and Carnegie. If we ask why Capitalism with its tendency to autocracy is nevertheless endured by communities enjoying public education and the political vote, the answer is, I think, threefold. 1. The growth of private Capitalist enterprise has attended hitherto and indeed made possible a progressive increase in the material standard of well-being. It has led to saving and the productive reinvestment of saving, and thus to the expansion of domestic industry and the provision of capital for undeveloped parts. Saving, lauded by mid-Victorian England as an individual virtue, served in fact a social purpose. It provided the fund by which a continuous growth of population could be maintained without threat to its standard of life. If the workers of nineteenth century England had been strong enough to secure more and spend more, their children to-day might be living in a poorer England. 2. Given political security and stringent property laws, private Capitalist enterprise performs much of its work automatically by reference to the list of market price. The enterprise which makes profits grows; that which makes losses dies. It was this automatic control which Adam Smith glorified under the tjtle of the Invisible Hand, and which the classical political economy reduced to dogma in its Laws of Supply and Demand. Even that part of economic control which was not based purely on profit and loss, e.g. the Discount Policy of the Bank of England before the war, was the outcome of silent adjustment which defied formula­ tion. After the war the Bank's difficulty was not merely to decide upon a credit policy, but rather to impose it in such a way that the credit system of the country could be guided without an open display of currency and credit management.